The Reserve Bank of India (RBI) has permitted resident individuals to lend in rupees to a non-resident Indians (NRIs) who are close relatives, subject to certain conditions. The RBI has also allowed resident Indians to repay housing loans provided to non-resident Indians who are close relatives.
Such lending has to be by way of crossed cheque /electronic transfer, subject to the conditions that the loan is free of interest and the minimum maturity of the loan is one year, RBI said.
The loan amount should be within the overall limit under the Liberalised Remittance Scheme of $200,000 per financial year available for a resident individual.
The lender should ensure that the amount of loan is within the Liberalised Remittance Scheme limit of $200,000 during the financial year.
The loan should be utilised for meeting the borrower's personal requirements or for his own business purposes in India. The amount of loan should not be utilised, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely, the business of chit fund, or nidhi company, or agricultural or plantation activities or in real estate business, or construction of farm houses, or trading in transferable development rights (TDRs), RBI said.
Real estate business will not include development of townships, construction of residential / commercial premises, roads or bridges, RBI said.